Telefónica pledges to remain in Venezuela

Spain's Telefónica has vowed to remain in Venezuela despite the economic crisis and continued theft of infrastructure.

Speaking to local daily El Universal, Movistar Venezuela's presidente José Luis Rodríguez Zarco said a telco requires government support and constant investment in Infrastructure to maintain a quality service.

Rodríguez Zarco said that the operator is constantly in talks with the government of President Nicolás Maduro and telecoms regulator Conatel regarding prices that have been imposed, which the company believes are "economical" (around US$1) compared to the monthly average for Latin America, which range between US$8-15.

The executive compared the average data allowance of 600Mb in Spain to the 10Mb in Venezuela.

According to a report in local daily Portafolio, a third of the estimated 6,000 antennas in Venezuela have been vandalized, damaged or stolen in the last three years, which has brought the network to the verge of collapse.

Telefónica, the second largest operator in the country after state-owned Cantv-Movilnet, has reported 536 attacks on infrastructure this year, according to the report.

Investing in infrastructure is more difficult in a context of hyperinflation, price ceilings fixed by the government and network blackouts in small towns.

Patricia Valladares, president of telecoms services association Casetel, was reported as saying in November that telcos spend 70% of income on network maintenance and repairs due to theft and vandalism, adding that rampant inflation has meant that the cost of fixing a base station has increased 600,000% over the past year.

Inflation is estimated to have been around 1,700,000% over the last three years.

Valladares said that the prices telcos are able to charge for services do not cover their costs.

Rodríguez Zarco was quoted by Bloomberg as saying that if it were able to charge US$3-4 a month, the company could begin to start recovering some of its network systems.

Telefónica Spain is largely supporting the Venezuelan operation. Consumption of telecommunications services have risen 73% over the last year, while a third of the firm's staff have left.

Telefónica's third quarter report showed an 86.2% decline in revenues in euro terms to 3mn euros compared to 23mn euros a year earlier. Capex in Venezuela was reported at zero in Q3 compared to 4mn euros in 3Q17.

Telefónica has been considering selling its troubled Mexican unit and its underperforming Central American units, due to its large debt load.